The latest Deloitte Consumer Tracker shows a fall in consumer
confidence in the first quarter of 2016, a sign of a degree of
caution returning to the consumer sector. Our index is now one
point down from Q4 2015 and three points lower than this time last
year. Confidence was down across five of our six measures, with
consumers' confidence in their level of debt the only element
of the index to see a rise.

The primary driver behind the fall in overall confidence is a
strong seasonal downturn in sentiment around health and wellbeing.
This year the trend has been particularly pronounced, with the
confidence reading for health and wellbeing falling by six points
year-on-year to its lowest level since our survey began. The recent
introduction of the sugar tax, the flu season arriving later than
usual and wider media coverage around health and health care have
focused consumers' attention on their wellbeing. In addition,
we believe that the growing use of health and fitness wearables and
apps may also be increasing awareness of health and wellbeing as an
issue.

Homeowners remain more confident than non-homeowners, who report
a four point fall in overall confidence from the previous quarter.
Homeowners' overall confidence remains flat at minus six. The
difference in confidence between these two groups is now at its
widest ever point, and comes as the Office for National Statistics
(ONS) reported a rise in UK private rental prices of 2.6% in the 12
months to February 2016. In London, rental prices increased by 3.8%
over the same period. The increases are above the 2.2% growth in
average weekly earnings from regular pay in January 2016.

Consumers in London were significantly less confident than
consumers in other regions, with overall confidence falling ten
points from this time last year. The capital also experienced a
sharper fall in sentiment around disposable incomes with a drop of
nine points compared to last quarter and a six-point decline in
confidence in job security. London, with its particular exposure to
developments in emerging and financial markets, has seen consumer
confidence disproportionately affected.

Most consumers continue to spend more on essentials while the
majority have reduced spending on small and big ticket
discretionary items in the seasonal downturn following Christmas.
There are now more consumers adopting expansionary behaviours and
fewer being defensive in their spending compared to this time last
year. However, the gap between expansionary and defensive
behaviours has flattened since the start of this year, suggesting
consumers have been more measured in their spending.

Despite consumer-focused economic fundamentals remaining strong
– for instance low unemployment, low cost of borrowing, low
inflation and gradually improving earnings – consumers are
clearly influenced by lower UK economic growth projections. Our
survey is showing that consumers are still relatively upbeat about
their own finances, despite growing concerns in the corporate
sector about the global slowdown and the potential for Brexit, as
highlighted by the first quarter Deloitte CFO Survey. The question
is how long this will remain the case, as consumers show signs of
being aware of these headwinds.

Consumer confidence

Health and wellbeing drives fall in confidence

Five of the six confidence measures fell compared to the same
time last year. The only area where consumers felt more confident
was in their level of debt, which rose by one point from Q1 2015
and is up three points from last quarter.

The fall in overall confidence was driven by a sharp decline in
sentiment around general health and wellbeing which fell two points
compared to the previous quarter and six points compared to Q1
2015. At minus 19 in Q1 2016, the confidence rating is the lowest
it has ever been. This fall comes at a time of growing awareness
around health and healthcare related issues and growing sales of
wearable fitness devices and apps.

Consumers reported feeling less confident about their job
security and job opportunities. These measures fell by three and
five points respectively compared to Q1 2015. This decline in job
related confidence must be viewed in the context of increasing
awareness of global economic uncertainty.

Consumer confidence

Confidence among Londoners and non-homeowners falls

The gap between the confidence of homeowners and non-homeowners
is now at its widest point since our survey began. While confidence
among those who own their homes remained flat, non-homeowners
reported a four point fall from the previous quarter. The findings
emerged shortly before the ONS reported a rise in UK private rental
prices of 2.6% in the 12 months to February 2016. The increase in
London was 3.8% during the same period. Both rates are
significantly above the 2.2% growth in average weekly earnings from
regular pay reported in January 2016.

Consumers in London were significantly less confident than in
other regions, with Londoners' confidence in job security
falling by six points and in disposable income by nine points,
compared to the previous quarter.

On 06 August 2013 the Department for Business, Innovation and Skills (BIS) published the Draft Consumer Protection from Unfair Trading (Amendment) Regulations 2013 (the "Draft Regulations") for scrutiny.

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